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Moving to SaaS: A Whole-Company Cultural Transformation

When traditional on-premise software providers contemplate making the shift to offering SaaS solutions, they face a host of technical challenges, including developing a multi-tenant architecture, building out a secure hosting environment, and creating an effective deployment methodology. What companies beginning the process may fail to fully appreciate is the extent of the cultural transformation this shift brings to an organization.

Here are some of the cultural changes companies must be prepared to undergo:

  1. Prioritize quick over big sales: Enterprise software salespeople are conditioned to go for the big win. With all the effort required to pass through IT and capital budgeting committees, you want to wrap as much as possible into each deal. With SaaS, you need quick wins, even if they are only for limited pilot projects, in order to start the meter running on recurring revenue. Project scope will grow as your solution proves itself. Salespeople must learn to think, “land and expand.”
  2. Embrace incremental improvement: Even in Agile shops, most traditional software firms limit the frequency of their major releases. For those that do release more frequently, the pace at which they can impact customer environments is still constrained by their upgrade rate. With SaaS, the imperative is to get working software in users’ hands and iterate. The critical cultural shift is that everyone in the company must embrace this philosophy. Internal stakeholders should not expect perfection from the outset, but should keep feeding ideas for improvement into the process.
  3. Adopt an educational mindset: A key virtue of SaaS is the reduced reliance on company IT resources to deploy and maintain software. Yet that doesn’t mean that business buyers want to shift their dependencies entirely over to a vendor. SaaS buyers relish the ability to learn and do for themselves. Providers must respond to this throughout the relationship cycle. Marketing needs to feed information to buyers so they can conduct their own research. Service teams need to provide user-friendly configuration tools. Support needs to provide robust online help and interactive forums where buyers can learn from each other. Overall, SaaS providers need to drop the approach of “we’ll camp out at your site until everything is set,” and instead view themselves as educators in best practices.
  4. Reconceive ideas of investment: Perhaps the greatest leap traditional software providers must make in changing to SaaS is over the initial revenue gap that occurs when replacing large license payments with smaller subscription fees that take time to build. There is no magic answer to the realities of the math, but companies can help themselves by changing their conceptions of investment. Those license payments are usually the result of long sales and development cycles. In quickly selling and deploying working software, a SaaS company’s investment changes from internal to external. The true investment is in the growth of customers.
  5. Commit to customer success: This all leads to the most important cultural change—an enhanced commitment to customer success. Of course, many traditional software firms preach, and some even practice, a customer service ethic. Release good code, sell ethically, do whatever it takes to ensure successful implementations, and respond quickly and thoroughly to support issues. In the SaaS world, however, all of that is not enough. The most smoothly running subscription service still won’t be renewed if it’s not generating real business value for the customer. What this means for SaaS providers is that, even as they hand the keys to configuration engines over to their customers, they also have to engage at a deeper level by really understanding their customers’ business drivers, proactively tracking relevant metrics, and reaching out to their customers with guidance on how to best achieve success against those metrics.

With all of the changes that must take place when traditional software providers move to SaaS, the final critical cultural ingredient is excellent internal communication. To whatever degree it exists, companies are well-served to focus on it more during this tricky transition. Err on the side of over-communication and active attention to fostering the culture the company will need in the years ahead.

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